Don’t junk the U.S. auto industry

November 19, 2008

eugene-ludwigMr. Ludwig, a former U.S. Comptroller of the Currency, is founder and CEO of  consulting firm Promontory Financial Group. Any opinions are his own; GMAC Financial Services is one of Promontory’s clients.

The economic upheaval wreaking havoc on the global financial system is threatening to claim another victim: the domestic automobile industry and its financing arms.

General Motors Corp. could run out of cash by January without help. Ford Motor Co. and Chrysler LLC also need fast government intervention to stay solvent. Automakers and the UAW are making their case to Congress this week for emergency help. But even the supporters of a $25 billion aid package for the auto industry are dubious about whether they have the votes to pass it.

This raises the question, why not just let them go bankrupt?  The domestic auto industry is everyone’s favorite whipping boy, and its problems have been growing for decades. Some are of its own making; many are circumstantial. But we cannot blithely accept its failure as somehow inevitable or deserved.

Our economy has been badly battered in recent months, and has become increasingly fragile. The erosion of our industrial base already presents real security risks to our nation. Why would we accelerate this sorry state of affairs at a time of national crisis by sitting on our hands and letting a signature American industry collapse?

The American auto industry is well worth saving, for many reasons.  One reason is that for the past decade Detroit has made heavy investment and steady progress in improving its competitiveness, what it calls “altering the DNA” of American cars.  US automakers spend $22 billion annually on plants, equipment, research and development. Breakthroughs are at hand in developing alternative fuel propulsion systems, and our national well-being and security depend upon seeing them through to completion.

If we allow U.S. automakers to go under out of anger, resignation, or ideology, it will only mean all the work and investment of the last decade will be ceded to our foreign competitors instead of being plowed back into the U.S. economy.

Another reason is the industry’s importance to the job market and the wider economy.  Automobile manufacturing directly employs a quarter of a million workers and indirectly about one in ten U.S. jobs are related to some degree to the automotive sector, according to GM estimates.  So the effects of a collapsed U.S. auto sector would not be limited to Detroit – they would be magnified as the ripples spread to related industries.

If we allow U.S. automakers to fail, millions of retirees depending on auto company pensions will be at risk and auto manufacturing jobs will disappear. The ripple effect won’t end there; millions of jobs in related sectors, such as  U.S. manufacturers of steel, aluminum, iron, copper, plastics, rubber, electronics, and computer chips, will also feel the pain.

Worse yet, the promise of a meaningful future for American manufacturing would fade. As that promise dims, the role played by manufacturing jobs as a passport to the middle class would likewise disappear.

The auto manufacturers did not cause this crisis; they were working hard to reinvent the quintessential American invention when high oil prices and economic upheaval hit, dragging them into the vortex. There is a tendency to think that an example must be made, that someone must be allowed to fail.  But do we really need to cut out of the heart of the real economy? When the patient is in the middle of a full blown coronary, it’s no time to discuss lifestyle changes.

We can and should revisit subjects like executive pay scales and expense controls when the industry isn’t at death’s door.  For now, we should recognize the gravity of the moment, and use the TARP funds and pass necessary auto-related financial stabilization legislation to avoid digging a bigger hole for the national economy.


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Please do *not* provide loans or other federal funds to GM, Chrysler, and Ford.
None of the reasons cited in the press make sense.

If GM goes down, the demand (for cars & parts) shifts to Ford and Chrysler–it won’t go away. If the demand for cars isn’t there, you help no one by splitting demand across 3 car co’s.

If the bailout is supposed to cause GM to make more fuel efficient and low pollution vehicles:
Why support the weakest most insincere car company in the lot? The Volt is all promotion and no reality. Remember that this is the company that killed the electric car…etc.

If you’re just trying to help the GM employees:
Why them instead of WaMoo-lians or Circuit City folk? Makes no sense to play favorites.

If you’re trying to help auto industry in general:
Why help one player (GM) at the expense of all the *US* employees and parts makers for Honda, Toyota, etc?

If you simply want to stimulate the economy:
Invest the same $ in new national assets with *lasting* value–NOT more cars. What’s better for America: more new cars or asbestos-free schools, fire-safe nursing home, clean/fast transit, hospitals without staph-infections, better-insulated homes? Isn’t this a no-brainer?

So *don’t* help GM. As Barack says, this is a time for *transformational* change. Bailing out Detroit is more of the same. Don’t do it. Please.

Posted by John Schlosser | Report as abusive

I drive a Ford truck. I love my vehicle. I am Canadian. Canada has a lot of oil. We stand to benefit from oil shortages. But the free market is something beautiful and worth defending. So is our air and water. If we let the market do its thing, allowing risk to be rewarded and letting dinosaurs become extinct, we would all be better off. We would have wind turbines – and probably natural gas micoturbines powering homes with heat and electricity. We would have natural gas vehicles – and of course cars with electric motors powered by fuel cells.

When I bought my car – after not driving for years – I told myself that my Ranger would be the last gasoline vehicle I would ever buy. I am looking forward to huge economic growth as we build different types of factories to penetrate new markets. I want the rulers of the glorified gasoline stations in the Middle East out of our lives permanently and completely. I want the free market to decide how the chips fall. For sure I really don’t want folks taking my cash to pay others with much higher salaries. That’s like rubbing salt in the wound.

Posted by Don | Report as abusive

We are not junking the auto industry, they are doing it to themselves. The executives are arrogant and undeserving of help. Until they are forced to liquidate their excess assets, they will continue to burn money. It will be throwing our money away. Chapter 11 would send a very necessary message.

Posted by Laura | Report as abusive

1. I do not like the use of the phrase “bail out” in this context that the media likes to use it. When we talk about “main street”, applying the label “bail out” or “hand out” is appropriate. When we talk about “wall street” or the business community, the label “investment” is more appropriate.

2. No investor will invest without a business plan that seems to have a reasonable chance of returning the investment with interest. This should be true of current government activities as well, although the return may not satisfy a Venture Capitalist.

3. The Auto Industry needs capital, which can only come from the Government or the Oil companies (what about them, by the way?). The money should be made available by the government if they have a viable business plan for the future. If there is not a viable business plan, then we would be just throwing good money after bad. In addition, strings should be attached to focus these companies on the national interest as well.

If these criteria are not met, let them go into bankruptcy protection.

4. By the way, very few people will make a major investment, such as a car, in a product from a company in bankruptcy protection. Too many concerns about service and support for such a large investment. Any auto company that seeks bankruptcy protection will completely fail without a doubt. Bankruptcy protection just is not an alternative option for an auto company. It is not a service company, unlike an airline.

5. Another by the way – someone wrote here that we let our locomotive industry die, so why not autos. Well, this is not the late 40s or early 50s when we had 50% of the world’s GNP and no economic competitors. This is the 21st century where through our enlightened global leadership there are hundreds of millions of people world wide realizing the American dream and providing real competition that just did not exist 50 odd years ago. We could afford to be Laissez-Faire about our economy then and let the locomotives die, along with fountain pens, etc.

Posted by Jack | Report as abusive

The main cost differential of the US auto industry is the impact of staff benefits. No union has(can ?) agree to any serious salary reductions, so in many ways allowing GM to enter into Chapter 11 is the “quick fix” that the industry needs to regain some competitive position…

Just adding money to the industry without fixing up the inherent weaknesses is throwing good money after bad…

Posted by michaelr | Report as abusive

I own a small manufacturing company. The current economy has caused great stress to us as well. The difference is that we have to find solutions to deal with it on our own, because there is no bailout for us.

Posted by Julie Gross | Report as abusive

I say let them go into bankruptcy. This will force them to rethink how they should move forward. Nobody helped my mom when she couldn’t make the mortgage payment on more than one occasion, she went out and got another job and we didn’t get to order pizza that month, or get that new GI Joe.

The big 3 have some significant improvements to make:

Restart with non-Union workers and non-Union suppliers. They may have done a lot of good 30+ years ago and that should always be remembered, but they are not necessary anymore.

They need to concentrate on reduced costs, start doing things lean and reduce the amount of different products they produce. Instead of GM offering 10-15 (or however many) models, offer 4-6 with few variations. Reduce the amount of options on the vehicle (who doesn’t want AC, CC, PB, PL, PW and a CD player? Make them all standard). You can increase the velocity of manufacturing, reduce the cost of inventory and be more profitable. Let the aftermarket folks “Pimp your ride” instead having a 1 unique car after another roll off the assembly line. It’s really easy, just simplify your product offering.

If the auto industry in America had done everything possible to cut costs, improve quality, and reduce risk, I’d say fine, lets help them get back up and get going again. But they have consistently mismanaged their operations and it is going to cost them…unfortunately, it will cost 250,000+ employees who had no say in it their jobs, but I chalk that up to the Union’s involvement as much as the big 3. Good luck to all involved, I’m not sure there is a Silver Bullet here, but there can still be a positive outcome if folks are willing to make some significant changes to the way they’ve historically done them.

Posted by Tom | Report as abusive

A bailout that is conditional on revamping the industry will still put the 98% of employees, not involved in engineering and design, out of work for two years while these new, competitive vehicles are being created. Unless – of course, we pay them to continue building those same old non-competitive cars, that won’t get bought, in the meantime.

Posted by Chris Erickson | Report as abusive

The airline carrier bankruptcy example is a poor analogue to the outomotive industry, and is not a valid comparison.

A valid comparison to the airline carrier industry would be the car rental industry – a bankruptcy there would not threaten a national competence and industrial base, but merely reorganize a retail-like chain that rents cars to move people around.

Bankrupting GM, Ford, Chryser is like bankrupting Boeing and the US airplane manufactureres – laying waste to a national asset and industrial base that is a competence, a core security asset, and a strategic industrial base. It is based on engineering expertise, production expertise and unique physical assets, and deep technological experience and know-how.

People need to see the bigger picture and what is really at stake.

GM is not like an airline carrier, and such comparisons are illogical and ludicrous.

Posted by Kent Howell | Report as abusive

I can’t fault the auto makers too much.

The big three could have built all the fuel efficient vehicles in the world but the American consumer would not have bought them.

SUVs are around for a reason … because that’s the market.

Posted by Walter | Report as abusive

The difficultly is that these are multinational corps. Who will just siphon off any funds supplied to foriegn shores.

Any bailout funds.
1. Must be kept inside the US.
2. Other funds that were designated for US operations,
must remain in the US. (no bait and switch)
3. Priority must be to retain US jobs.
4. All levels of management must take pay cuts equal to or greater than that of the UAW benefits.
5. All future management pay increases must be tied to percentage increase in UAW benefits.
6. All checks and agreements to be signed must be done by congressional auditors.

Anything else, and you’ll end up with the same result as if they went chapter 11. The big 3 will use these funds to offshore the remaining US jobs.

Oh, as if someone was sending a subliminal message, Reuters security word for this posting is “toast” !!!!

Posted by Tim Keating | Report as abusive

Bravo Mr. Ludwig!

You’ve put into words much of what I’ve been thinking for the last week.

If the Big Three stubbornly resisted the change to smaller more efficient cars it was not “their idea” to do so. I think the auto industry is perhaps best understood as a reflection of its shareholders and customers priorities.

I’m afraid that the media, the President, and some outspoken Senators are pretty well explained by the insensitivity and hubris they’ve been spewing.

The automotive industry paid for the birthing of the middle class in America. It brought a good living to its workers and customers for a hundred years. It gave us products that were recognized worldwide as the best of the best.

Why in the hell would we bail out a bunch of overpaid leeches who’ve gambled away half of our retirement funds and turn our backs on the folks who gave us what we wanted for all those years?

Posted by John Eberly | Report as abusive

The Big 3 have made fiscally irresponsible decisions that have led to their current cash flow disaster. Don’t be fooled into thinking that “American” cars are made with “American” parts. They are not. I am in the automotive industry and sell parts to repair shops. The parts that are used in original equipment manufacturing are more often than not made in China, France, Mexico, Brazil, India and other off-shore countries. The big 3 committed themselves to producing an inferior product and only lately have been trying to correct the errors of their ways. After several years of their $0 down – 0% percent financing they are experiencing a cash crunch. Who’s going to bail out the numerous repair shops that went belly up during those years because everyone and their mother was taking advantage of the Big 3′s short-sighted effort to increase sales of their vehicles? The Big 3 tried to crush our industry by selling cars at a rate they ultimately couldn’t afford and now we’re going to have to foot the bill for their greed and stupidity. Not fair! Detroit will undoubtedly loss jobs and money…but who’s speaking for our customers who have lost their entire life’s work and savings? It’s time people are held accountable for their actions.

Posted by bailmeout | Report as abusive

I have worked as Ford management. I have worked as Honda management. The Big 3 deserve NOTHING. The pivotal question taxpayers should be asking is: “How can Canadian & American executive and workers at foreign manufacturer plants in North America make the best cars in the world but the Big 3 can’t?”

- Posted by turismo
If you, as you’ve claimed, worked at both, what prevents you from figuring out the answer? It’s just 3 letters: UAW – as simple as that. There’s no unions at foreign auto plants in the USA, and the management would do everything they can to keep it that way.
It’s well known that the Big3 are losing (yes, losing!) about $1500 (give or take some – depends on the model and current “incentives”) on each vehicle they sell. It’s also known that about $2500 in each car cost represent retirement and health care expenses for current and former employees. Remove this extra cost – and all of a sudden there’s profit instead of loss.
Whoever tells the workers would be abused without union representation – it’s shameless lie. When Nissan started hiring in Canton, MS, people were queuing for jobs despite of no union being there (or maybe because of?). The pay is somewhat below UAW rate – but there’s no union dues to be paid regardless of being employed or receiving unemployment benefits. There are benefits, too – not as luxurious as UAW package, but in line with other non-union jobs throughout America. And – the most important part – NO retirees to provide pensions and benefits to.
Just let the Big 3 to break free of UAW stranglehold – and they’ll be viable again. The bailout would not help with that – after all, the Congress Dems are the best buddies of the unions. The Chapter 11 will.

Posted by Anonymous | Report as abusive

How many of the “big 3″ executives flew to congress on a commercial airline (as opposed to the company jet)? If the big shots are not willing to show a little constraint, why should I, as a slave to taxes, pay for their excess while they lay off other taxpayers for whom I will have to pick up the slack? Double whammy to me – if I manage to keep my job.

Posted by Kevin A | Report as abusive

“Worse yet, the promise of a meaningful future for American manufacturing would fade. As that promise dims, the role played by manufacturing jobs as a passport to the middle class would likewise disappear.”

You forgot to add: a passport to the middle class for high school dropouts thinking they’re entitled just because they were lucky to be born in America, and because their father and grandfathers and all the uncles are/were the union members.
The times have changed. As soon as it was discovered that a Mexican or a Chinese can do the same job just as well for just a fraction of pay and no benefits, and the cost of manufacturing elsewhere, including shipping, tariffs, bribes to local honchos, etc.etc. is less than local production costs, guess what? The jobs moved to wherever it’s most cost-effective to produce. The only jobs that stay are the ones that can’t be done elsewhere (your drain can’t be unclogged in China, so plumbers are safe) or require special skills not available out there. The artificial preservation of jobs and compensation levels through labor agreements can’t be sustained anymore.
Manufacturing used to be High Tech in XIX and 1st half of XX Century – not anymore. It moved down the food chain. These days, the passport to the middle class is at least a college diploma – and more and more it’s less so with time passing. Now beside a diploma (especially “liberal arts” meaning “no marketable skills”) one needs to have also some certain skills to be hired into a middle class level job. Of course the night with a boring professional book is less appealing than a night with a 6-pack of beer and TV, but that’s how you get into the middle class these days. And manufacturing jobs, with very few exclusions (but how many of new Abrams tanks and 5th generation fighter jets we need?) are being more and more working class jobs (by definition, below the middle class threshold).

Posted by Anonymous | Report as abusive

Congress referred to the Detroit Automotive industry as “dinosaurs” isn’t this the pot calling the kettle black? Our Federal, Michigan State and Detroit City governments are much more in need of a overhaul than the Detroit Automotive industry.

While the bailout sounds like a corporate handout, it is not. It is a loan needed by a company that has junk bond status yet is too big to get corporate financing. Chrysler already did this in the early 80′s, and the government profited from the interest on the payments. Also realize that ‘dumping union contracts’ to be cost competitive won’t work. The UAW will still be the employer of choice for any newly reborn GM. Experienced employees will still demand high wages/benefits (the current UAW wage is very comparable to those offered by non-UAW plants). And the taxpayer would still be on the hook for the unemployment benefits given to the 425,000 employees waiting for the bankruptcy to settle, along with the pension plans thrown to the PBCG (Federal Pension guarantee). Pensioners get only a portion of what they paid in, leading to more stress on Social Security. While a restructured GM might be desirable, bankruptcy filing are far from ‘taxpayer neutral’.

Posted by Mike | Report as abusive

What is wrong with the US,
You want your Government to give your money to obscenely rich business people, when you can’t even go and see a Doctor in your so-called Democratic country. Give the 25 Billion to small enterprising Business’ that employ many more people and might come up with some new revolutionary ideas. Don’t forget Henry Ford. The belief that large organisations create more jobs is a myth you gullable people all fell for. Take a minute and have a good think about it. Who employs & supports most of middle America? It’s not the corporations, it’s the small business’. Remember the small butcher, baker, fruit shop. How many families did they employ, many more than your mega stores of today. Remember the bulk of a corporate profits go to shareholders & company executives not to the workers. Why bail these fools out, let them sink and give other people a go. Do you realise that corporations usually pay less than 10% in taxes, while the individual or small business has to pay 30-50%. These bail outs are just a redistribution of wealth from the small business & taxpayer to the mega wealthy, and let me tell you many of the owners of your corporations aren’t even Americans. Don’t be fools.

Posted by brad | Report as abusive

Why not cut the pay of automakers from 80 dollars an hour to 50 dollar an hour
Why not put a cap on CEO income, Dispose off all private jets , and pay should be based on performance.
Doctors lose licence if they make mistakes , Why not sue the CEO and take them to the cleaners if they fail

Resident, New York

Posted by resident | Report as abusive

GM burned through $7 billion in the last quater. Their share of the $25 billion, was reported to be $10 billion.

At best this ammounts to 6 months of operating costs, and then what?

It seems unlikely that this ship which has been trying to turn around for the last 10 years, will manage to spin on a dime in 6 months.

Posted by Mike | Report as abusive

Mr. Hardenburg, please retain your mindless comments, and don’t waste people’s time with your foolishness.

Anyways, the problem is the whole system a mess. Big companies, from which the economy is highly dependant need more government regulation (call it socialism, or w.e.). These companies can’t take foolish risks, then allow for the execs to retain their multi-million dollar salaries. Economic freedom sure, but economic responsibility must also be taken into account. When companies begin to take the wrong path, government intervention is pivotal,so that economic downturn can be prevented before it starts.

Posted by Will McCdoudleson | Report as abusive

I was in the

I believe the matter is incredible easy: the US goverment is like any other credit source, it can set standards and goals for their money:
a)reduce wages
b)reduce all the ridicule union benefits.
c)trim top company officials salaries and benefits.
d)focus on the business of making new cars that the public wants.

Posted by Pablo | Report as abusive

Yes, the impact will be massive. But this $25bn isn’t going to change these car-makers into profitable companies; it’s only going to delay their bankruptcy for 6 months or 1 year by paying a price of $25bn which will be burnt away by these auto-makers? What good is this going to do to America? It is like just pouring water into a vase with a hole, hoping that it will be filled up; it won’t – let them go bust and we should be able to clean it up although it seems impossible.

Posted by Jinjae | Report as abusive

Lets face it America,
Your so-called Auto industry is in its final death throws. Foreign companies have been whipping your butt for years, and you’ve ignored it. This industry has no hope for you, it’s over unless you lead the way with the plug-in electric car. A subsidised economy is no more than a magic trick, and we all know they’re not real. Just look at your Agriculture industry, it’s just another form of welfare. Now because of your in-ept government led by a fool who couldn’t even put together 2 words, your Auto ‘Welfare’ Industry is just about to start doling out the welfare cheques as well. ‘Henry Ford’ would be turning in his grave. Surely you people are smarter than this.
If you choose to prop up industry the inevitable outcome is they eventually fail. Unfortuanately welfare doesn’t fix the problems only new ideas do.
If you all keeping living in this fantasy land you will have nothing left. As far as I can see the only industry you have that makes any real money is war, and soon you won’t even own that.
You see you can only make money 2 ways. 1/ You Plunder, 2/ You create. Unfortuantely the plundering is over for you, it’s now time to create.

Posted by Brad | Report as abusive

they’re already dead. any attempt to undo decades of misteps in a matter of months is wishful thinking. $25B won’t save them. only WW3 can save these dinosaurs

Posted by Kombo | Report as abusive

The problem is firstly sales. The government is no good at sales (or manufacturing or finance…). GM wasn’t ready for the double whammy of a gas price escalation and a credit crisis. Now the gas prices have moderated but the credit crisis has not. The credit crisis should be fixed, by bailout and regulation/oversight.

As for the manufacturers, they should make and sell cars until they go broke. The government can pick up the pieces more cheaply then, and soon thereafter we’ll be back to normal with no hangover.

Posted by James Short | Report as abusive

The big 3 make smaller vehicles – and they sit on the dealer lots because Americans are buying SUV’s. Even the so called enviromentalists in CA government are driving SUV’s (check out thier fleet vehicles on the city websites!) -> not the small, environmentally friendly, green cars that they are trying to force the big 3 to make. In capitalism, manufacturing builds what is selling – not what folks are preaching. It is not only the managment that is at fault – but every American that bought a large vehicle instead of a small one….

Posted by CtheLight | Report as abusive

It is incredible that we even have this debate flooded with irresponsible, lynch-mob mentality against one of our key industries. Obviously, bankruptcy is not a solution for any automotive company, especially in the present economy. Would you buy a car from a bankrupt company or do you know of anyone who’s done it lately? Mr. Ludwig presented an excellent rational case in support of a bridge loan for our domestic auto industry, which, if one judges by the only existing precedent – Chrysler’s “bailout” 30 years ago – at the end may very well turn out to be a good investment for us the taxpayers. The prospects for Chrysler survival back then seemed at least as bleak as for the Big 3 now (note that Ford had profits earlier this year until wild swings in gasoline prices and subsequent credit crisis hit it hard). At the end Chrysler paid the loan seven years before the deadline with $300M profit for taxpayers on a loan of $1.5B, which would be roughly equivalent to $7-10B in todays dollars.

It is interesting that the Big 3 have been profitable almost everywhere else but in the States. One of the main reasons is that in Europe and elsewhere there are stable national energy policies that facilitate good planning. For example, they have stable gasoline prices around $6-8 with the help of taxes used for infrastructure and similar. As it became brutally clear now at the end of these disastrous eight years of George W. Bush administration, we have no energy policy or industrial policy for that matter. This is a great opportunity for President-elect to develop one. It should include stabilizing gasoline at $3-4 with implied taxes to be used for improving our infrastructure and promoting green transportation. Then watch the Big 3 returning the loans well before time, with ample profits for taxpayers and with some great new green technologies in their again profitable vehicles.

Posted by John | Report as abusive

Any company which produce products which do not sell is allowed to go bankrupt, why the big 3 be given an exception? Jobs lost as excuses….etc? What have happened to free market concept and belief?

Unless the BIG 3 with its super rich CEOs know that their companies can go bankrupt and they can go unemployed( hopefully no golden handshakes have been arranged in their contracts other the incentive to fail has already been embedded), flying in their private jets to beg for bailouts, only then they may be able to find a better way to compete with other car makers and keep their jobs as well.

All this hooplah about CEOs and private jets is just a red herring. John said it all in his comment, just read that; perfectly said. As for bankruptcy working as a viable option for the airlines (Eric’s comment), there is one key difference–the average American isn’t buying an airplane. But we do buy cars. Would you feel comfortable buying a car from a bankrupt carmaker? How about getting it serviced and getting parts with the prospect that the manufacturer could disappear shortly? Bankruptcy is not a workable solution. We need to lend a helping hand to the Big 3.

Posted by Mike Archer | Report as abusive

The Big 3 are not looking for a bail out! Only a loan from the Federal Government. If you look at the amount of Federal monies that all the employee,s at the Big 3 pay into the federal taxes you will total this in the billions.This would basically be a loan from the people-to-the-people of the Big 3 automakers!!!!! I beleive the Big 3 automakers should shutdown all their plants for 6 months and let the american people feel what the impact financially to this country would be. Also after 911 all three companies dontated 10 million dollars each along with product to New York City.

Posted by Danny Kirkpatrick | Report as abusive

As the controller of a closely-held business enterprise I can partially agree with “bankruptcy is not the end” but it will cause significant “collateral” damage through additional bankruptcies throughout the automotive supply chain.

A significant portion of our business base was/in within the steelmaking industry,(another industry known for the same faults that the american automotive industry is guilty of.) While steelmaking continued to run “business as usual” they kept continued, extended pressure on the supplier base for lower and lower pricing and extended payment terms(90 – 120 days). Within a short 1 – 2 year period we experienced roughly $750,000 in lost revenues in addition to losses in ongoing business due to closed capacities.

The winners in the whole bankruptcy scenario?, the accountants and attorneys for the bankrupt companies(thanks to their having first priority to available funds) and the officers and interim officers of the bankrupt companies. Years later the venders(those who survived)received less than 1/4 of 1 percent of what was due to them.